Over the past two months, Rahul Singh in Dubai has remitted more money to his family in Patna than he usually does. In the middle of a slowdown with his job no longer secure, he’s been increasing the remittance. “I have commitments that need to be fulfilled.”
Increased remittances like Singh’s added up to a surge in 2008 even as the economic situation globally turned from bad to worse and job losses prevailed across the world. Reason: flight to safety, rupee appreciation and increase in migrant remittances, like Singh’s.
Market players say that the global financial crisis in the month of September resulted into sudden jump in remittances.
“The remittances suddenly jumped in the month of October and November in search of safety,” said Harpreet Singh, head (NRI & wealth advisory services), HDFC Bank. “Also the dollar depreciation resulted into inflow of funds.”
World Bank in February revised its initial estimate and has projected inward remittances into India at $45 billion for calendar 2008.
The weakening Rupee has added its bit. “Every 2.5 per cent depreciation in the dollar resulted in the doubling of volume and number of transactions in remittances,” said Singh.
“The growth has been much higher than the currency depreciation, reflecting a continuation of up trend in migrant worker remittances into India,” said Girish Nayak, Head (NRI Services), ICICI Bank.
The end figure is likely to be higher than the World Bank estimate, according to experts. “We expect the inward remittance for the year 2008 to be around $45-50 billion,” said Kiran Shetty, country director (India), Western Union Financial Services.
“This is because people working abroad send money for family maintenance and that is the last thing to get affected,” said, Sudip Bandyopadhyay, CEO, Reliance Money.
Western Union witnessed a rise in its revenues by 29 per cent and a growth of 50 per cent in volume of transaction in the quarter ended December 2008. “Rupee depreciation is definitely a contributing factor to volume growth,” said Shetty.
Reliance Money, a major player in the remittance business, witnessed a 70 per cent rise in its business. “The remittances grew very fast in the first half of the year 2008 as the growth continued,” said Bandyopadhyay.